Alan Milburn and Stephen Byers, two leading architects of New Labour, yesterday made a pitch for the post-Blair agenda, warning that the chancellor's policy of widening means testing in pensions and tax credits may go too far and make working less attractive, as well as leading to a reduction in social mobility and a deeper poverty trap.

The close political allies mounted their co-ordinated attack in Commons speeches on the budget.

The Treasury defends tax credits, saying they are the most effective means of helping the poorest people. But excessive means testing, critics argue, can act as a disincentive for low-paid workers: much of any extra earnings is not reflected in take-home pay because as earnings rise the tax credit drops correspondingly.

Mr Milburn focused yesterday on how tax credits discourage people from work, while Mr Byers, in a Commons speech on Monday, said the policy of means testing pensions could not be "a long-term solution ... to the problem of establishing a fair pensions policy".

It is understood Gordon Brown and Tony Blair had sharp differences on pensions policy at two meetings on March 15 before last week's budget.

In the Commons yesterday Mr Milburn called for direct tax cuts for the poorest in work, suggesting the 10p tax rate should be cut year-on-year for five years. He has been advised that a 5p reduction in the starting rate would cost £2.5bn, but if the cut affected just low-income households the cost would be less.

Mr Milburn warned yesterday that the budget showed that "the number facing marginal tax rates of 60% or more" had increased by almost 1 million "largely as a consequence of the workings of the tax credit system". The Institute of Fiscal Studies had said that "without remedial action this could worsen work incentives with implications for the government's ambition to increase rates of employment and social mobility".

He added: "On fairness grounds it surely cannot be right for people towards the bottom end of the income scale to face higher marginal taxes than those at the top end."

He urged that Mr Brown's announced review of aligning income tax and national insurance contributions for low-income families needed to address the fact that 21% of families who were eligible to claim the children's tax credit did not do so.

He said the review needed "to consider additional ways of making direct, targeted cuts that would enable more people to escape the poverty trap".

The cost of tax credits is now £11.3bn and their administration has been the subject of repeated criticism.

Mr Milburn said that while more people were better off, poverty was more entrenched. "There is a glass ceiling on opportunity in this country. We've raised it - but we haven't yet broken it."

Mr Milburn went out of his way to praise tax credits, saying they made a real impact on raising living standards, adding that before their introduction thousands of low-income families faced marginal tax rates in excess of 70%. "I was brought up to believe that hard work and endeavour would be rewarded, not penalised."

On Monday night, Mr Byers strongly urged the government to back the Turner commission proposals of last December, which supported the introduction of a near-compulsory universal state pension. The chancellor is known to have doubts about the affordability of Lord Turner's plans.

The commission will intervene in the debate with a statement next week "on specific issues which have arisen in the debate on pension reform" since publication of its second report last November.